freefall, the euro falls sure way as draghi says he is ready to take action. but is it time for government to do more? strikes.e gives into serious customer say the new iphone then's in their pocket. -- bends in their pockets. good morning.

welcome. you are watching "the pulse. airbus is lifting off today its new best-selling jet. it will happen around 12:00 to lose time -- toulouse time. and it's the first-ever combat mission for the f-22. the pentagon's most advanced fighter in action over syria. let's get to our straight -- our top story. mario draghi said he is not targeting the country. just deliveredas a speech on the single currency.

lithuaniaalking about joining the euro. me is the lines "joining the euro" shows the currency is attractive. i would say the euro is not very attractive right now. i guess he is trying to say, back in 2012, if people were joining the euro the way they have, where is it to go? the for mario draghi, that is an an invitation to the eurozone. it is the bigger countries and the structural reform countries -- >> they baltics show that reforms are possible without the valuations -- without devaltion's -- without uations.

we have been talking about air france a less couple of days. there is no way that france would do the kind of internal -- >> we hear reform bantered about. it is a word with no meaning. you have mario draghi and hollande talking about reforms. if you're talking about corporate strategy, you can't. you can't talk it up. doing something about it is something else entirely. couple of days a ago made the exact point. reforms. talks about but as soon as it gets difficult for you, you fall. there has been a lot of talk about the germans softening their stance. recently was very

a punchy, digging his heels, really pushing his view that we are not going to do more, particularly on softening key. -- softening on qb. don't mistake the thermometer for the illness. >> everything is compressing at the moment. the question if that is a reflection of reality. >> you look at some of these debt-gdp ratios. >> we will continue to monitor what is going on. we have been speaking to the italian prime minister about the ecb. he said the central bank policy must be a consummate -- be accompanied by reform. >> at this moment, european

not a reserve. of power is more than european central bank. for draghi -- for the future, i think the first thing in this moment is realized structural in our country. this is the commitment. now the situation is in the hands of the government, not in the european central bank. draghi makes very in port of things. now it is the responsibilities of government. >> are you saying that he shouldn't go forward with quantitative easing or it wouldn't be effective? decisions the recent

about a similar quantitative easing, my personal pinion, the decisions are good. the results after the first month and after the period in the siding about small and medium entrepreneurs, for the moment, it is impossible to give a judgment until the fourth concrete results. >> we will bring you more on that. an italian business getting punchy about what needs to happen next. renzi needs to go faster, further, focus on a few things. we will get ricardo barbieri's take. we will talk about renzi, draghi, france. air france, its management has

caved in. extension ofd european units. the strike is still on theoretically. >> yeah. they made this offer. they caved. they said, ok, we will scratch on that and instead focus on transavia france. they call this a 100% row france project. they asked everyone to get back to work. the unions are meeting this morning. they will get a statement sometime today from them in response to what air france has offered. at this point, the strike stands. >> this is what the pilots wanted, isn't it? the government has their backs and the pilots win. >> it does seem like the pilots have got what they wanted. the government yesterday, there

was always back and work, and suggested that the transavia your project should end. 's >> so the strike continues. >> did they just come out that? >> air france pilot strike continues. yeah, the strike is continued. the talks will continue today. this is a spokeswoman saying this within the last few minutes, talking about talks with the unions that are ongoing. even this is not enough potentially. >> there is obviously more that they want. we will have to keep hearing and seeing what he sticking points are. >> what is the view of the industry of what is going on here? the unions, they pilots are key figures within this company, but they have held the company for ransom and won. >> that have done this before.

the union has been fairly strong. there are problems within fans in terms of labor unions and the laws that protect those unions. other companies have managed to work in france and expand. work.is a way to make it that the stock is rising on the back of this. that, maybet everyone is feeling like it was going to be fairly positive so we will have this day what happens -- have to see what happens now that the pilots have rejected it. >> there is not a formal rejection at this stage. on the back of this news, we are trading at 7.8. thank you very much. speaking to the

boss of europe's biggest budget carrier about the air france tellingmichael o'leary, me that the french union rules makes the country and an attractive place for expansion. >> i think france will be the company -- the country lest interested in growing. the way they operate some of their union legislation with the base we have in my say -- in marseille. grow rapidly in spain, italy, germany, central european the u.k. will grow easily. we are going three times daily from glasgow to london with lower fares and more frequency. we are happy to expand in those markets where we see a lot of opportunities. until the french sort out their legal structures and particularly their north korean attitude to unions and

protecting unions, i think we will be fairly slow to open bases in france. >> you have expressed in the past dismay about the way the pilots approach this industry. what advice would you give over to air france right now? policy he isy the presently pursuing, making concessions to the pilots, which are ludicrous concessions, would not expand trans onvia -- transavia. to thoseto stand up unions. if that means take a strike for a week or two weeks, take it. you don't get stronger and better competitive airlines by giving concessions to the least work sectors in europe. eventually, even the french will work that out. >> michael o'leary talking to me

a little earlier, yesterday afternoon to be specific. is the profitt that will be the upper end of the range that will be put out by the airline. ryanair share prices up on this. up quite nicely on the back of this. we get mr. connolly speaking a little bit later. mario draghi speaking on lithuania as we speak. that is the governor or the chairman of the central government of lithuania. integrationg that is the critical factor moving forward. needs more integration, not less.

euro trading 1.2 713.

>> welcome back. you are looking at live pictures from lithuania. questionshi answering from local press -- not local press, a member of the eurozone will actually mean.

tosaid he will be prepared do more when it comes to protecting and driving growth within the eurozone. let's get a sense of what this morning is about, what we really learned what the next ups are. the moon this morning, the euro-dollar driven by the fact that are your draghi is prepared to do more. this is not necessarily new. given what else is going on, it has taken on significance. 1.27. euro approaching it is a bit more than i personally expected. i was looking for a level of 1.28 in the fourth quarter. the position of the euro has picked up a little bit and makes the job of the ecb and a bit easier in that they do not have pressure immediately to come up with something else. at the same time, they must give the details of the new

abs-covered bond program, about which we know very little. i have seen many investors in the past few days and the general feeling is they are skeptical. they don't think the ecb can buy as much as perhaps 500 billion aros of abs-covered bonds and sharp period of time. at some point, something a slap to be added. canraghi is convinced he get the balance sheet significantly higher than that, get more money into the system than that. working, the next logical progression is that he has to look at other asset classes. between an interim step abs and full qe? >> according to the ecb, yes. first of all, on the size of the balance sheet, a lot of people look at the size of the balance sheet in 2012. eurosee 3.1 trillion where it is now 2 trillion.

i think the ecb wants to expand the assets held for policy isposes which at the moment 7.100 billion. realized by the teal is also a the tltro's question. so there is some uncertainty on canspeed in which the tltro size the balance sheet of the ecb. they also need to buy assets. but a bsf and cover it would proceed relatively so it -- but abs would be relatively slowly.

it could be something like corporate bonds, agencies. european agencies before they get to a bsf and covered bonds. in terms of the substance of what the ecb will be doing, they will be buying bonds issued with a pool of guarantees by government, essentially even though it would go through the markets, in my opinion, it would be budget we something close to efsf with thes intervention of the ecb. i don't think. government bonds are the last resort. the thinking is that if you condense further sovereign spreads, you take away any discipline-enforcing mechanism. there are signs that the market .s facing in some qe

i think there must be a significant reluctance to go to government bonds even though in terms of your qe and lament -- implementation. he is also saying the ecb in its commitment to conventional policy, we will see how that one goes. my big question of the morning -- when does the government side of this equation start to kick in? italian businesses are cross with renzi because he is not moving fast enough. eric schmidt saying, you want to get out of this whole? start innovating. you are not going to get any

progress. we have hans nichols outside a german shopping mall. it will be closed on sundays. look at the picture across europe. this guy can do what he wants and he is doing everything that we can to make it happen. but where's the help? where's the assistance? actions the government to take this story forward? >> right, so limited. we see fighting taboos, fighting things that are considered part of life. , the pilots jobs can take down an airline for things they don't like, expansion into europe. they've also ryanair was in a very good mood -- the boss of ryanair was in very good mood expand they wanted to out of france.

the next step of the story, if the contracts of the violence would be the same as air france. in other words, the pilots want the low-cost airline to have the same contract with the pilots. the silos,t change these incredibly well-supported silos within french industry. >> i am absolutely convinced, when i look at how successful large corporations in france have been, france also looking at its scientific and technological capabilities would be able to rival germany and do even better than germany in some sectors of the economy. it's just that it cannot remove the shackles that constrain economic growth. i think this is true in general in europe. i think renzi keeps making promises. he keeps touring the world. he is now in the u.s. making the right noises. but the real test is next monday generalcalls the

directorate of the democratic party. and he must find a compromise solution that will not split the party but will deliver a liberal market reform that is credible. toause that is really key people's willingness to invest in italy. fire peoplet effectively, your willingness to hire would be extremely limited. this is common sense. you don't need a phd in economics to figure it out. yet, more than 40 years after the law was passed, it is still extremely difficult, not impossible, to change it. >> we will see what happens next monday. we have to take a break.

>> you can look at equities higher but this is the one big mover in the fx market. that drops below 1.27 since november 2012. mario draghi speaking right now in lithuania. no big headlines driving this will lower. but it marks something else. that is not using her deaths -- that is not your weakness but dollar strength.

currencies, the dollar is up against every single g-10 currency this morning.

>> welcome back. these are the bloomberg top headlines. talkingenzi has been about the need for growth over austerity in europe and told us that job creation was the key to improving his country's economy. we have been speaking exclusively with the ceo of deco. think it is going in the

right direction and it is absolutely needed. we don't have to forget that italy is in a recession, two quarters of negative growth. i think it is a signal to the political environment, hey, reforms are absolutely needed to get people back to work. made a 43tually has million pounds that recovery in tesco share price. shares inllion tesco an agreement with goldman sachs. it comes days after tesco says it overstated forecasts. eric schmidt has been speaking to bloomberg. says europe needs to promote talent and innovation. >> europe has to choose innovation. europe, i the model tough situation entering a third

recession, the only way for europe is to embrace innovation. by that, they will have to have more festival labor markets. they will have to do a lot of work to create local companies. there is plenty of talent in europe but the model has to shift. >> eric schmidt speaking here on bloomberg. joining me now is john a flow rate he. conferencee google in paris which is looking at this whole issue about the right to be forgotten. rome,e been to madrid, to how close are we to getting a better understanding of how europe's relationship with google will work moving forward from here when it comes to the issue of privacy? >> good morning. we are getting closer but there is quite some traveling to go through still. .ome ideas are clear

compliance is never in russian. the book -- in question. the question is how to implement the general strategy that has outlined by the european court of justice and see what is in store for the future. >> in terms of what this means in the wider issue for privacy and the internet and europe's relationship with the internet, do you think the direction of travel is the right one? do you think we are beginning to define how this will work better here in europe? where we in a situation we are overblowing this, that europe is doing itself a disservice by overly focusing on this one issue? >> i think there is a risk of overemphasizing one particular fundamental right, privacy, against another fundamental right, which is the freedom of expression, freedom of speech. thisld be astonished if

conflict were left unresolved. at the moment, there is a privilege pensions towards privacy when it comes to the contrast between privacy and freedom of expression. we hope we will be able to reach a more valuable balance between the two. >> if girl -- if google was a european company, do you think it would be taking a different attitude? >> is hard to speculate on something that is not the case. >> my point is really that the into of u.s. interference european privacy is large over the past year in terms of the headlines that have been my -- have been made, from spying on angela merkel and issues the way that google is handling their data. european action to the united states or is this a european reaction to an issue that we feel is not being taken seriously?

>> as you outlined, the environment has been unhelpful to resolutions to diversions. in other words, politics and the spying disaster have made all possible damage to anyone who wanted to find a common solution. well, than thinking, instead of a fight between two different parties, i would like unfortunateas circumstances in which it is harder for her want to fight -- to find a solution. but politics, business, security issues have not helped at all in this particular circumstance where we want to find a way of harmonizing two fundamental rights. >> when we get these rules finalized in november, how do you think they will end up being? they stray from the draconian

side of things, how do the other companies react to that? do they give up on europe? how do they work through these rules? >> i can only speak personally, but i believe there is a very strong interest in making sure that is worked out. a little bit like a marriage that is going through a difficult moment. both sides want to make it work and i believe that politics on one side and business on the other and more american philosophy about rights and a more european philosophy about rights will find a convergence. that is not easy and requires a huge effort. at the moment, sometimes you have the impression that effort to be increased. have been stunned that it has taken so long for silicon valley to wake up to this issue here in europe and maybe there is a penalty to now be paid for that. we will leave it there.

tech.continue to talk apple has been hit with a 1-2 punch. numerous users have complained about their new iphones bending in their pockets. ms. execution once again. execution once again. >>. -- there are a lot of b's hating apple. i am sure kevin cook is banging his head against a few walls. the iphone 6 plus, the 5.5 inch screen, can work. -- can warp. the casing seems to slightly

warped, slightly bend and this as come under great wuhan -- hooha. eight, asftware, ios a whole. it needs to be able to receive phone calls and some cannot. so they are addressing it. they say they will be updating us and is a can with a new version in the next few days. thethe only way to rectify situation is if you uninstall and go back to the operating system had before. timing if you have this new phone that you are excited for. 10 million have sold over the weekend. now it is unraveled. this perfectly choreographed unveiling seems to have gone slightly awry.

it did happen before. the math wasn't so good in the previous nature. the mapping software did not help and gave google the upper hand. slicklly, it is usually when it comes to apple. bending, not so. >> and it stays bent. that is problematic to put it mildly. let's bring in my low, the author of "psychopaths of silicon valley" which i guess is pretty relevant today. reputation -- had a reputation of being great at execution. >> yes. file a delta the fact that that is no longer the case? it is too big. it cannot execute. a lot of razzmatazz but then problems. >> the last keynote, the watch

and the new phones, were supposed to be the keynote that apple proved that post steve jobs a can still really straight products and capture the imagination. it has adid it show metaphorical and spreading waistline. hadoutrage the people have -- u2 directly downloaded to their devices, they need tools to get rid of it. then you have this problem with this phone which is so gigantic and yet it bends if it is in your pocket. it is like wearing a splint against your leg, it is so gigantic. it is a bit of a catastrophe for apple.

this was supposed to be the moment in which we found out whether apple could still -- >> make or break is too aggressive, isn't it? yes, it has a couple of glitches and maybe it will be bending, this isn't going to break the company, is it? >> what we mean by make or break is can the company still set the agenda and create and release just warm it up. x that everybody is talking about? or is it going to move into a microsoft period where the company might as well make a ton of money but no longer captures the imagination? apple is now struggling to capture the imagination. >> sometimes risks don't pay off and then you fix them and you move on. the u2 partnership was an incredibly safe choice. the watch is a safe design. they have not taken risks like

they did with the ipod, the .phone, and the tablet there have been tablets around for years and they have not taken off. apple came in and made it a multimillion dollar market that other manufacturers were desperate to get back into. not takese they did any risks, they are not as exciting -- as exciting as they used to. >> are people looking in the wrong place? the innovation is coming in the software, where the new story is taking off, the whole health kit lifestyle in its infant say. -- infancy. i think tim cook would take the view that steve jobs took him this is -- took. these boxes that the hardware comes in are assuming new forms

all around us. we have connect to devices in our homes, fire alarms and lights which is that connect to the internet, things all around us powered by software. the thing is the health kit that apple really is, other companies are building this stuff. a particularly better implementation than anyone else has done. ios 8, you can't have too much of a good thing. it is turning the company's design philosophy -- windows phone is what you give elderly people and children. apple is this thing that is a drooling inbred neighbor that can't work a washing machine. gigantic font and flat design and rainbow colors. >> you expect that to continue or do you expect there will need to be change? as you say, it is making lots of money. share prices are at record

highs. from the ivory towers that apple, life must look pretty good. >> i am not sure about that. let's look at the dna of, say, microsoft which still makes a ton of money, shareholders are very happy at microsoft. executives are very happy at microsoft. but many do not care about money whereas executives at apple have priorities elsewhere. they generally do want to live up to the rhetoric that they often exhibit in their keynotes. they want to change the world. they want to create beautiful devices that transform how we interact with each other. >> what is stopping them? if they have those aspirations, your view would be that they are not doing that. >> manlike steve jobs comes once in a lifetime. i think it is severely limited when it does not have that kind

of ruthless, take no prisoners among vision become iconic person driving the way the company ought to look. apple is wandering into too many fields. it is making acquisitions it had never run -- never did before. the beach deal is interesting because it was an admission of failure. everything apple has done with the cloud has been terrible. make cloud software so it bought some. that was a humiliating admission of defeat. it would never have happened under steve jobs. >> are the shares worth what they were? >> apple shares will always be worth money. it is like the microsoft bob baum -- arkansas problem. alwayswho work at apple think they are making the world a better place. the problem is that advantage and the magic we are used to seeing from apple is starting to slip away. >> we will leave at there.

thank you very much. back in a couple of minutes.

>> airbus's new plane takes off today.

we have the maiden voyage of the a320 near. in all fly from toulouse little over an hour. aviation, john leahy push to this airbus out the door a few years ago. everyone was really stunned at how well it sold. how big it is today in terms of delivering on that promise? >> it certainly has been a runaway success described as the fastest selling aircraft ever, which was a little bit of a surprise for what was a little bit of a compromised solution ar a perceived problem in chokehold sector with boeing in

the market for so many years. then a money-saving aircraft that can deal with higher fuel prices. -- his is >> low-cost carriers and also the operations of bigger network operators which have been unprofitable. operationstoday, the , including the a320 and a 737. those carriers on the one hand hop have problems with capability. then for the low-cost carriers, that can only enhance their appeal. the biggest customers are the low-cost airlines in asia.

europe has 100 planes coming. it may not be transformational in terms of the a 380. this plan looks pretty similar, exactly similar to the naked eye to every other a320 we have ever seen. operatethe airlines to it, it is a big thing. and it is a big deal for airbus. >> thank you. up next, berlin ghost shopping. germany's megamall opens its doors. would think this is an excuse for me to stand outside yet another mall opening. but it is a chance to talk about some serious economic data and will german consumers start spending and potentially rescue the european economy?

largestny's soon-to-be shopping mall is opening in berlin. is as the country comes under pressure to increase consumer spending. hans nichols is live at the same. -- the scene. are the germans clamoring to spend huge amounts of money? >> they will have to spend an

awful lot. when you consider the 26 billion that germany exports more than they import, they will have to sell more tickets inside the small to close that gap as germany keeps exporting big-ticket items. cars to china, industrial equipment, this is the challenge. yes, there is a push to get germans to consume more, but fundamentally this is a macro challenge. be here toall will capture on some of berlin's tourists. you look at retail spending in berlin, it is clearly higher than anywhere in the country. four point 7% versus .4% year-over-year. versus .4%% year-over-year. when you look at household spending, the germans spend so much less than their counterparts, either in the states or the u.k.

they do spend a lot on travel and that is counted outside of germany. but they fundamentally do not buy the big-ticket items that can potentially stimulate aggregate demand. that is one reason why the overall economy in europe has so many challenges. i will go inside and do my bit for the economy. i will get you a cheap christmas gift. >> as i would have expected. i've already got yours and believe you me it is cheap. for those listening on bloomberg radio, "the first word" is up next. a320neo, it's first light, we will talk about that with that morris. ed does not look radically different but it has a new engine and a new wing on that 320. plus, air france caving into the pilots union. we will talk with the aviation

club chairman. he will be joining us to talk about these guys and why air france and have caved in.

>> freefall. the euro drops sharply as mario draghi says he is ready to take action. caving in. air france gives into striking pilots. the union says the strike will go on. bent out of shape. customer say the new iphone bends in their pockets.

good morning to our viewers in europe. good evening to those in asia. a warm autumn to those waking up in the united states. i'm guy johnson. this is "the pulse." airbus is lifting off its best-selling new jet. it makes its first flight this hour. it has new wings and a new engine. this is the f-22. we will show you the pentagon's most advanced fighter plan. it has been in action over syria. but first, to our top story. the euro very much under pressure this morning. traders showing confidence in mario draghi possibility to weaken the currency. draghi's ability to weaken the currency.

it is going to make european exports more competitive. what do we take away from the message? what happens next? jonathan ferro joins us. >> i don't think we learned a lot that was new this morning. it was a speech about the future of the euro. it was nice happy talk about lithuania joining the club next year. how this is a stamp of approval for the eurozone itself. i think we got more interesting data this morning. it was about the pace of contraction in the eurozone. bank lending to companies and households ranked lower than july. it is getting less worse, but it is contracting. >> not what he wants. >> not what he wants at all. as well asd credit supply credit.

we have been talking about outsourcing your balance sheet. the appetite to take those is not there right now. >> the banks are not taking in and they are not passing it on. this comes to the point that governments now need to do more. going, you need to be part and parcel of that. the focus is very much on the monetary side of things. as we come to the point at which you cannot point on a piece of string, you need to get the demand going, you wonder what the rest of 2014-20 15 is going to look like. you have italy needing to do more, but the french caving in. it is a really nice case in point. seeing the problem that europe has. >> just to sum it up very

quickly, italy and france need to do many of the same things. matteo renzi has got the mandate to drive reforms through. we saw it in the european parliamentary election. this guy has people behind them. , can his approval rating get any lower? sure, it can go lower. it is pretty download right now. he has not -- darn low right now. he has got a finance minister who keeps kicking the budget down the road. drive going to be able to through those reforms? matteo renzi has support, lucky for him. >> the question is how long will these guys get? there is another body that comes in and says, you will do it. you have seen that in greece, and portugal. i'm not suggesting we get that far. >> you never know.

talk more about the italian prime minister. mario draghi has been speaking about the economy. the ecb policy of doing more must be accompanied by structural reform. of mariok the decision draghi is a good decision. obviously, in this moment, the is not acentral bank further reserve. decision of mario draghi to increase stimulus to the economy is a good decision. what wefuture, i think need to do in this moment is rely structural reforms in every country and this is the commitment.

now the situation is in the hands of the government, not in the european central bank. makes veryi important decisions. now the responsibility is of the government. >> is that to say he should not go forward with quantitative easing? or it would not be effective? i think the recent decisions , myt quantitative easing personal opinion, i would. results after the the first months and after the period in which banks decide about a relation with small and medium entrepreneurs. for the moment, it is impossible to give a judgment until the first concrete results. renzi.eo

later this hour, we will bring you more from our interview with italy's prime minister. speaking to the ceo of the world's largest temporary employment agency. >> it is absolutely needed. we don't have to forget that italy is again in a recession. two quarters of negative growth. back in a recession is ot good.ly n reforms are absolutely needed here to get people back to work. >> labor market reform, front and center today. a number of different angles we are pursuing on that story. one of them is what is happening at air france. management is caving in. will expand the low-cost unit in exchange for the pilot strike. the union said the strike will continue. the strike is costing as much as

20 million euros per day. i spoke earlier to the ceo of ryanair. >> i think france would be the country i would be least interested in growing at while they have not sorted out their union legislation, the way they operate some of their union legislation. we are very content to continue to grow rapidly in spain, italy, germany, central europe, the u.k., where we are growing rapidly and taking share off of the easyjet. we're going three times daily from glasgow and edinburgh. lower fares and more frequency. we are happy to expand in those markets where we see lots of opportunities. until the french sort out their legal issues and their north korean attitude toward unions

and protecting unions, i think we will be fairly slow to open base in france. >> final question. you have expressed in the past dismay about how the pilots approached this industry. what advice would you give to air france right now? >> the policy he is presently pursuing right now, making concessions to the pilots, , i think concessions you have to stand up to the pilot unions. if that means take the strike for a week or two weeks, take it. you are never going to make air france or lufthansa stronger or better competitors by making concessions to the people are among the highest paid sectors in europe. eventually, even the french will work that out. michael o'leary, the ceo of

ryanair. having a good day today. generating guidance at the top end today. let's go from aviation to technology. apple customers are little bent out of shape after record sales for the latest iphone and customers are complaining about the hardware and the software. here with more on the glitches is caroline hyde. bent out of shape. >> nice pun. -gate.he gate -- bend some people are calling it ibend. are upset and annoyed. they have just spent hundreds of pounds, hundreds of dollars on a new phone. you sit on it for a while and it moves, it bends. the thin aluminum casing is not

strong enough, it seems. let's get the video out. it is quite incredible. >> and then it stays that way. many have taken to twitter. there has been an outpouring of discontent. you have bend-gate and then you have bugs. they had to pull the update of ios8. the key thing you want to do with a phone is make phone calls. >> much does this thing cost? >> $650. has beenfice that going on. it is not only the hardware, which is usually beauteous and wonderful. but the software. you are not able to make phone calls if you upgrade to the ios8. to undo this, you have to reinstall your previous version and in a few days we will upgrade it for you. but the previous software has bugs. that is why they rolled out

ios8. this is a company that is usually so slick and so choreographed, the way they feed us information. you look at some of the updates that have come through and the problems that have come through under the tim cook administration, this is not completely uncommon. we ran a little package about three or four days ago which said, don't update, wait for the first update to come through. >> never be a tester. many of the app developers have been trying the ios 8 four months. -- for months. it crashed everything. the bugs started to be fixed. speak to the key bloggers and they say they never upload

until you have been told to. men are feeling a little bit uncomfortable. this is not the undoing of apple. -- some are feeling a little bit uncomfortable. this is not the undoing of apple. we are still expecting sales to rocket. see 61 million iphones in the december quarter sold. the phone is important. it is more than half of annual sales. $170 billion. they are about to unleash it in 22 countries. sales are still going to ramp up. maybe, that at lower of perfection is trickling away. >> caroline hyde, thank you very much indeed. the latest trials and tribulations at apple. we will take a break. flight down into lose

-- in tolouse. they have already sold a lot of them. can they deliver on the sales? we will talk to an aviation analyst. what is next for airbus. ♪

all spank."atching we are live from bloomberg's european headquarters in london

-- you are watching "the pulse." we are live from bloomberg's european headquarters in london. clean energy benefits outweigh production costs. joining me now is the ceo of intelligent energy holdings. some people are skeptical. musk is one of them -- elon musk is one of them. what is your answer to the criticism? >> the good news is that the fuel cells i am holding in my hand is like an engine. where is a battery unit charges and then you need to sync it up and recharge and you have to plan your life around where the next recharge is, a fuel engine is like what you do today. you put fuel in it, it produces high-efficiency, with zero

emissions out the back. both have the same drivetrain. it is an electric drivetrain. what we do is to make this available to all consumers. when you go to a refueling station, you don't expect 20 minutes to refuel your car. you expect to be able to refuel very quickly and then be on your way. customers.y large we helped them to go to market faster with our technology. we do not take the place as to when the infrastructure comes out. engine,ssue is not the it is the hydrogen and how we provide the hydrogen or manufacture the hydrogen. a veryill seems to be big problem for the industry to solve. >> good news. it is already a huge industry. if you think about a third of the hydrogen produced today, it is actually refined gasoline. it is a very big industry.

we position our business in three divisions. we help the car manufacturers to go faster to market. we already have a small fleet of cabs going around taking passengers on and delivering great service. we excel a rate them to go to market and we do not place a bet as to when the infrastructure comes in. the new energy started 15 years ago. you are the arm of the hydrogen fuel-cell. >> that is a great way of looking at it. ipoed to do specific transactions and we launched two new divisions. we paves the way -- paved the way. we don't see that the value of the business we will be delivering to our customer will be changing anytime soon.

the trend we are operating on is the need for efficiency. five take the business generation division and we take long-term contracts, eight-year contracts, where we power more efficiently these existing infrastructure in india. the central power generation is somewhat challenged. we operate at the edge of that. our business is increasing. >> elon musk is wrong. >> he has strong views and we don't agree with him. >> this is an engine. i put a fuel source next i put a fuel source to it. this looks like a harmonica. this will save the world? >> this is a simple thing. it has already made a difference. piecesre highly precise of technology.

they are made in such a way that you can go more faster, more efficiently with all of the devices you have. it might not bend either. >> thank you very much. >> intelligent energy holdings. we will take a break and come back in a couple of minutes. ♪

>> welcome back. you are watching "the pulse." at the top of the hour, the airbus heads to the skies for its first-ever flight. toulouse. , fly aroundnd over a little bit, come back again. it is a big day for airbus. it is a big day for the sales this throughushed and made it happen. it turned out to be a big sale. how big a day is this for airbus? >> it is massive. this aircraft is going to revolutionize fuel costs. that is key to the airline industry right now. >> that is why we saw so many of them. >> over 4000. >> it took a while for everybody

to be in the -- to be convinced that we needed to do this. should we see this as an interim step? or is this a revolution? >> ok. to make a new aircraft, i don't think that can happen for another 20 years. movell see an incremental toward an all electric aircraft. this is a first step. we will see a series of new aircraft with new engines, new wings. the next step will be more electric components. taking out the hydraulics, keep making it lighter and lighter and lighter. >> that implies bigger batteries. or batteries. , that highlights the risk of bringing in a new aircraft. they are bringing in three new aircraft in four years at airbus.

>> this strikes me as really interesting. what it tells me is that in toulouse and seattle, they have learned a lesson. incremental is better than revolution. it is better to revamp then build a new aircraft. think that the lesson of the last generation of airplanes is that risk-taking is dangerous and something that should not be pursued? i think the 787 comes with a degree of risk. that the plansbt right now, there is an awful lot

of pressure on the supply chain. it is not so much on boeing and airbus, but on the supply chain beneath them. produce having to lighter and cheaper components and ramp up production very, very quickly. >> do you think we will see more of the 320 push to market? >> absolutely. would like to see more. we are little further down the road. what we are talking about here are incremental changes. is that the way the aviation industry is going to operate from now on? rather than big revolutionary jumps? we saw the problems they had with the wiring. jump.7 was a huge >> in terms of technological development, it is nowhere near as complicated. we're talking about the full

engine. an allre going to see electric engine? that strikes me as being a massive risk. you wonder whether the regulators are going to be on board with these kinds of risks. 787 had an easier path to market than hindsight would have suggested. you wonder whether the manufacturers are looking at what happened and differing that kind of decision. this wask to an extent a deferral. they did not follow the same path. they have gone a slightly different way. they have simply said, we will take the listing aircraft and we will run a new engine. put all this into context. airline costs, 34% of them are fueled. it was 12%. fuel is all-important.

ons should cut costs by 20% a fuel side. that is terribly important to those airlines that get those aircraft first. >> when you look at the supply chain and you wonder -- the question is always asked and was of,d after they really kind after boeing's decision with the grip do theseof a manufacturers have of the supply chain? i would have thought it was fairly straightforward. do you think that the supply chain is actually capable of delivering the kind of evolution you are talking about? and gethink the roles are capable of delivering that at this point? >> not at this point, no. that is not going to happen. there are a number of factors. at precision cost

parts. they have been buying smaller component parts. people need to bulk up. the pressure being put on them to reduce cost, especially by boeing, is being increased. it was the smaller suppliers. it is i think that is very much his problem. works is that where the risk lies? >> i think so. airbus losing about 42, 44 of month of the a320's there talking about going up to 50. >> a massive step forward for the line. we will see what it does. they have sold a lot, i guess the better execute them now. thank you for joining us from ihs. we're going to watch that flight in a little bit later. 43 million pound bet on the recovery in share prices.

an agreement with goldman sachs. the move comes, tesco has pushed its stock. eric schmitz has been speaking to bloomberg and her's to europe to promote talent and innovation. >> europe has to choose innovation. and right now, the model of europe and their tough session -- situation, the only way for europe is to brace innovation. and by that, they're going to flexible laborre markets, create local companies. there is plenty of talent. the model has to shift. >> the u.s. and arab warplanes struck oil fighters controlled by the islamic state, hitting 12 facilities used to the groups oil smuggling operations which has up to from the militants, according to some estimates they met -- been raising more than

two main dollars from oil sales a day in iraq and syria. to the markets. >> i will bring a little bit of it appetizer. dax up. down a littlee bit. here's the main course. drops a little bit. the reaction in the euro over the last three months has been absolutely stunning. look at it over the last 6. draghi has done his bit at the ecb, but i think you cannot mask what is going on on the other side of the trade. you have a strong dollar. the dollar up in the last six months, pushing higher again today. predominant one, the

euro. look across. up against every single g-10 currency this morning. the dollar strength is something to think about. if you do, what does it mean for the timing of the fed? ?oes that push it down the road it is something after think about. in the bond market, yields come in lower. the yield on the 10 year, down to the basis points. look at these yields. they're very low, aren't they? is that a son european crisis is over? some say, don't mistake the thermometer for the yieldness. >> there are very few examples of it around europe making headlines at the moment. legit headlines been made by examples of little reform -- 20 of headlines been made by

examples of little reform. toms go to new york and keene and find out what we're looking at. >> good morning. markets on the move. we will be looking at these cross assets of equities, bonds, currencies, commodities. our guest is in the equity market. he is optimistic, pushing against the walls of worry, including that gold price, really getting down to $1200 an ounce. look forward to him joining us. we will look at the housing industry. we will look at the confusing back and forth of the american housing market. presidentcenter, the will fly back to washington. not quite sure when the prime minister of britain will go back to meet with parliament but he will be leaving new york as well from the yuan meetings and we will talk to brian katulis. >> a lot of discussion happening

around syria here in london. thank you very much. tom keene joining us with "surveillance" very shortly. raptor has flown its first-ever combat mission. here is everything you need to know about the pentagon's most advanced jet fighter.

>> looks like they can do all kinds of amazing things. just the arrow dynamics are phenomenal in terms of the size. coming up, no end in site. pilots say they will stand their friends -- air france. plus, more from our conversation with the italian prime minister. find out what he says he won't compromise plans to overhaul the nation's labor market. that is all coming up after the break. ♪

>> welcome back to "the pulse." we are live from london. now after a costly and 10 day pilot strike, air france has offered to go back on its planes to expand its business into europe. the union is still on strike. we don't know whether this will be enough to bring them back to

work. the chairman of the european aviation club, former executive at a number of airlines, joins us now to give us his take on all of this. good morning to you, professor. >> good morning. >> has the ceo of air france done the right thing backing down? well, he is done the right thing, but i think you have to put the issue into perspective. air france, basically, is a dinosaur. it is an airline which failed 15 .ears ago subsequently to understand the competitive world was changing. they were in competitive denial. the changes they are now trying to introduce should have started much earlier. in addition to that, these changes require a

transformational change on behalf of, not of the management, but the unions and the pilots union. --h answer your question sorry. >> carry on. >> to answer your question, has he done the right thing? he has done the writing short-term, but it doesn't solve the problem air france has fundamentally which is it is being battered in the long haul by the gulf carriers and in the short-haul other low-cost carriers. >>'s air france was an american company, would it seek chapter 11 at this point? >> probably. to get out one way of the difficulties. but of course, chapter 11 also requires a workforce which understands that there on the edge of a brink. >> what is it going to take for the pilots union at air france to be convinced of that?

you've only got to take a trip from charles de gaulle across paris to see how successful easyjet has been. what is it they're not getting? why are they getting the idea the european short-haul, at least, is now a low-cost date? norwegian --et, these are the companies making money at the moment. in therd to make money short-haul is a legacy carrier. are the pilots not getting this and why are they not hitting this? >> it is a historical problem. employees in state-owned companies always thought the state was behind them. what previous air france managements have tried introduce cultural change and change work practices, they haven't always been backed by the government. the idea of various governments

and political persuasions have tended to walk away when there have been tough decisions that need to be made at air france. some this is -- there is evidence in this. yesterday, we saw the government was making the announcement before the airline was making the announcement. this is a government error, not necessarily a management error. the government has effectively force them into the situation, you think? >> i'm not saying that. atre are three parties fault. the management, historically, because it is felt to wake up earlier to the complexity of the low-cost carriers. air france and the unions through, for not going cultural change in understanding the world had changed around them. and the government as a major shareholder in the for not supporting cultural and competitive change when the

management was trying to do that. think they can wipe their hands and say, it is not my fault. --do you think it would be if you wanted to see air france saved, would one of the things you would need to see happen, do you think in the situation, would be the government would sell a 16% stake? was interesting and the u.k., we saw that with air france, and effectively allowed management there more room permit new for. do you think the european governments should sell stakes , therefore,carriers be able to resist the temptation to meddle? >> it is two things. it is not just the shareholding than its two divest themselves of, it is also the political desire to intervene in order to safeguard jobs if they think jobs are being threatened. that is what the prophets, too, need understand. sector,n the aviation

and the median term, it will be with the low-cost carriers. easyjet, ryanair employ thousands of pilots. pilots the future for the communities, not necessarily with the legacy carriers operating short-haul routes. it is that transformational understanding which is missing among the pilots unions, in some countries. --at the moment, law home long haul is subsidizing short-haul. how long do you think i can carry on for? >> that is up to management. my view is, the longer term what we will see is the long haul threatened not necessarily by the short-haul of the long haul airlines, but the short cost airlines feeding the major hubs. that is a transformational change. change.is a significant

professor, we will leave it there. thank you very much, indeed. executive at a number of european carriers. seeking tows command raise as much as $9.6 billion and telecom italia. former ceo wants to run the company. he has discussed the plans with new york-based financial advisors, sovereign wealth funds . apparently, among the investors that have expressed an interest. that is what this story is doing to the share price. this is a bloomberg story. look at what is happening. more on the story when we come back. ♪

>> welcome back to "the pulse." a lot of news happening in the last few minutes. we're getting news that telecom onlia is having a big impact share prices. this has been a company in focus for quite some time. sol trujillo is saying he is putting together a package that could ultimately result in a bid for telecom italia. he is saying he is going to seek a giant government backing for this project, which is currently -- has not approached the board yet, which is quite interesting as well. potential bid on the table. this after we are starting to get news that we are seeing a

group of investors getting together to make a bid led by sol trujillo for telecom italia. the government aspect of this is fascinating. yesterday, erik schatzker sat down with the prime minister. he is talking about reform of his country. us theins us now to give take on this. what did he have to say? >> i will say this, i was impressed by pro-minister renzi. he is come to new york with the message that he is dead serious about reform and willing to stake his political life on it. he needs to demonstrate to the europeans into the world, in fact, that italy is prepared to changed, italy is prepared to reform not just the labor laws, but also the judiciary, the bureaucracy, and stamp out corruption.

start with italy's labor laws which are very rigid and make it difficult, as you know, for companies to hire and fire people. i asked him, prime minister renzi, are you prepared to negotiate, to compromise with the unions? here is what he had to say. >> i respect all ideas and i respect also the ideas of unions. compromise is not a bad word. we can achieve a compromise if necessary. in this case, compromise is not the way. we must absolutely invest in a of investing in labor markets in italy. we defend workers strongly in italy, but in the last six years, the number of unemployed has doubled.

12.6% unemployment. germanic numbers -- dramatic numbers. time ofhis is not the compromise. this is the time of correction. >> to no compromise with the unions. that is one flank of your battle. is withr, of course, the senate. you need the senate to corporate with you to events or legislative agenda. what is your relationship like with silvio berlusconi? berlusconi is the former prime minister in italy. everybody knows. but he is also the leader of a party of minority. i think when you write the new legislation, the new modality mustonstitution, everybody

stay on the table to discuss. it is impossible to write the legislation of elections without other parties. because the players of the match our two. it is impossible for only one to write alone the legislation. it is impossible in a spot, in baseball,cer -- football, soccer, to write the laws without other players. the relation with berlusconi is that. i hope the party of berlusconi find an agreement for the constitution, for the electoral law. in the system, in this normal system, we must then play a different match, obviously. for me, it is absolutely important in this moment to give

up for the young employer. also, new constitutional .egislation and electoral law >> it matteo renzi can succeed with reform, he will have the ability to ask for flexibility. it goes without saying, guy, i would have talked to prime minister renzi about telecom italia had the news of sol trujillo interest in making a bid for the company known yesterday, it wasn't. as a result, that was not on the menu. >> i suspect he is scratching his head with how to do it that one right now. thank you very much, erik. to goss once renzi faster. is sol trujillo going to spur that forward?

let's talk to one of the reporters who reported on the story breaking. how far down the road is this? what do we know about the timeline with relation to this bid? >> thanks for having me. for reporter in milan has been following this for from us, actually. clearly, this is a project that has been in the making for a couple of months. emperorse five roman of rebuilding the pantheon, anyway, this particular specimen fishing -- almost as ambitious. ago, a a couple of weeks bidding war for brazilian. is comingqjillo out of my trend of doctors often

qatar funds includinga and abu dhabi, as much as $10 billion to invest and telecom italia is one of the capital increase or shares on the open market. one can message is preposterous and telecom italia, they're not looking for us to financial investment of more than industrial kind of turnaround italia further losing market share to companies that are really keen, is a stable broadband rollout -- there's a new two speed of the broadband rollout of the company for competitive. >> fascinating. restorative regular on bloomberg. in great attention. that is it for "the pulse."

pilots want guarantees on contracts, strikes have been extended. this is not the end of the story. that is it for "the pulse." "surveillance" is up next. ♪

>> the coalition expands as the united arab emirates jets destroy islamic state will assets. prime minister cameron calls parliament back to london.

builders grumble to meet demand in america's topsy-turvy housing market. and pfizer, will they push back against secretary jetblue? good morning, this is "bloomberg surveillance." we are live from our world headquarters in new york. i am tom keene with scarlet fu and adam johnson. a morning brief. >> overnight, ecb president mario draghi says a rising euro has contributed to economic slowing in europe. wonder how low he wants us to go? >> weakening this morning. >> as the dollar index rises to a four-year high. possibly making market manipulation a criminal offense. durable goods orders and capital good orders come out this morning. service sector purchasing index comes out at 9:45. the kansas city fed's take on e